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‘Pakistan’s Economy is in Ruins under the Army’

Pakistan’s economy is in dire crisis and the government’s
response over the last few months has been: change the entire finance team at
all levels and bring Musharraf/army supported technocrats to replace the
existing team and now set up a National Development Council (NDC) that includes
not just the finance and planning ministers but the Chief of Army Staff. The
NDC is ostensibly supposed
to “set policies and strategies for development; formulate and tailor
policies to achieve accelerated economic growth; approve long term planning for
national and regional connectivity, and provide guidelines for regional
cooperation.”

In which country, aside from Pakistan, is the Army Chief
part of a committee meant to boost economic growth and development. As The
Economist wrote in January 2019 “Pakistan’s army is to blame for the
poverty of the country’s 208m citizens. It has fostered the paranoia and
extremism that hold the country back.”

As investigative journalist Taha Siddiqui writes,
“Pakistan’s economy is in a crisis, with a $100-bn debt and inflation at a
four-year-high of nearly 9%, but the army is pushing for expanding its
businesses and budgetary allocations. A recent international investigation
found that the military-controlled engineering firm Frontiers Works
Organization (FWO) plans to go into the lucrative mining sector and wants a key
role in Balochistan’s Reko Diq mine, which has one of the world’s largest
untapped copper and gold deposits. And, it appears that the government may
favour it over other investors. nother sector where the military seems to be
getting preferential treatment is oil and gas exploration. The Frontier Oil
Company, a subsidiary of FWO, has been granted a contract for a 470km-long oil
pipeline that is estimated to cost $370 million. Reports suggest that due
process has not been followed in awarding this contract.”

According to Dawn economic columnist Khurram
Hussain “The situation on the ground is almost red hot now. You cannot spin
inflation, and you cannot plug macroeconomic deficits with emotional appeals.
It is true that the government did not create this situation, they inherited
it. But it is equally true that at the time when they arrived in power and the
deficits were growing, the prime minister was busy talking about the dam fund,
making emotional appeals for contributions, and then about distributing chickens
among the poor, and ‘recovering looted wealth’ to plug these deficits. The
government inherited the situation, but never took it seriously and always
believed that it could be addressed through charity, lottery or begging from
‘friendly countries’. And that’s what they did for nine months. In the
meantime, the revenue effort flat-lined altogether, the business community
duped them into major subsidies and incentives and egged on a devaluation, only
to deliver flat export proceeds in return.”

As Hussain notes, foreign exchange reserves were $9.8
billion in August 2018 when this government came into power. After $3bn
borrowed from Saudi Arabia, $2bn from the UAE, $2.2bn from China (among other
borrowing), the reserves now stand at $8.8bn. So as he asks
“What happened to all this money? The answer is simple: it was digested in the
bowels of the economy’s dysfunctions, leaving us more indebted (domestically
and internationally) and even more precariously teetering on the brink of
financial insolvency. Meaning the adjustment that was necessary back in
September had acquired overriding urgency by May. Now the government is in a
position of digging itself out of a deeper hole where the reserves are
concerned, and claw out more taxes in order to bridge the fiscal deficit.
Hence, the brutal nature of the ongoing adjustment. It has to make up for lost
time while trying to get ahead of a rapidly deteriorating situation.”

Maybe as academic and public intellectual Pervez Hoodbhoy notes “In a
mathematically savvy country no major project — civil works, manufacturing, or
health — is approved without a full fiscal and cost/benefit analysis, detailed
supply chain management, and logistics connecting the nodes. Teams of technical
experts guide political leaders through the maze. But for Pakistani
decision-makers, whim suffices. Why so few genuine Pakistani experts and why is
math illiteracy so rampant? We have good soldiers but not a single top-level
Pakistani mathematician anywhere in the world — even those recently decorated
with Pakistan’s highest national awards for mathematics would probably flunk
undergrad math exams at places like MIT. Why is the math taught in our schools
and universities ridiculously bad? The answer has two parts. First, most people
confuse math with arithmetic and with cut-and-dried formulas. But it’s not
that! Mathematics is the music of reason whose rich melodies need good tutoring
and hard work to understand. Second, math matters much but only if you think
the laws of physics, expressed mathematically, actually govern the physical
universe. Where Inshallah holds sway, math based predictions are easily overridden.
Precise planning then becomes useless or secondary; math skills are unneeded.”